UK Adopts US-Inspired Approach to Tax Whistleblower Rewards

In the latest UK Budget, Chancellor Rachel Reeves announced an enhanced US style whistleblowing reward program, effective immediately. HM Revenue and Customs’ Strengthened Reward Scheme, or SRS, is modeled on a long-running IRS program and designed to incentivize whistleblowers to report serious tax avoidance and evasion by offering rewards of up to 30% of tax collected.

However, the success of the program will turn on more than an offer of high-value rewards. Adequate guidance, transparency, and safeguards will all be needed to encourage whistleblowers to come forward.

Introducing enhanced rewards is an important first step, but some features of the SRS—including the limited guidance and support available for whistleblowers, and the discretionary nature of rewards—may hinder the program’s success unless remedied.

Strengthened Regime

The backdrop to the SRS is the government’s focus on closing the tax gap, reported to be £46.8 billion in 2023/24. HMRC’s prior whistleblowing reward regime wasn’t well-publicized, and total payouts in 2024 were less than £1 million. The government likely watched the success of the IRS program with interest: In 2024, it paid out $123.5 million in rewards out of retrieved tax of $474.7 million.

Under the SRS, whistleblowers can receive between 15% and 30% of the tax collected (excluding penalties and interest) where the information provided leads to HMRC collecting at least £1.5 million in tax. Rewards are given at HMRC’s discretion and aren’t guaranteed. Individuals aren’t eligible for awards if they are the taxpayer involved, or if they otherwise planned and started the actions that led to the tax evasion or avoidance.

UK-US Differences

While the SRS is modeled on the IRS scheme, there are material differences between them that may undermine the efficacy of the UK’s initiative.

• In the US, the IRS offers mandatory awards for tip-offs meeting specified criteria. In the UK, any reward remains entirely at HMRC’s discretion. HMRC hasn’t published any parameters for its discretion, which introduces a significant element of uncertainty into the process and may hinder individuals from coming forward.
• In the UK, individuals are barred from receiving an HMRC reward if they played a role in the misconduct. Under the US system, an informant’s involvement doesn’t automatically disqualify them from a reward, although it may result in the IRS reducing the award amount. This distinction matters: Incentivizing complicit insiders could materially increase the chances of HMRC uncovering wrongdoing.
• The IRS has an established Whistleblower Office to administer and ensure that whistleblower award claims are “fairly determined and timely paid.” The IRS also publishes detailed expected timeframes for reward payments and provides clear information on confidentiality. HMRC has no such office, the guidance states that information provided is “private and confidential” (without further explanation), and information on timing is limited to a statement that "[t]here could be years between sending the report and receiving any reward payment.” The lack of transparency in the guidance is not conducive to encouraging reporting.
• The IRS publishes anonymized data on whistleblowing rewards every year, whereas HMRC seldom releases comparable data (unless responding to freedom-of-information requests). Publication of HMRC’s whistleblower rewards will be essential to encourage others to come forward.

The guidance also could benefit from being more specific about the nature of tax non-compliance on which HMRC is seeking information. This now is limited to stating that “serious” tax evasion normally involves large companies, wealthy individuals, and offshore or avoidance schemes.

Once a whistleblower overcomes HMRC’s lack of guidance and gets to the stage of submitting a report, they are forced to condense their tip-off into a summary with a limit of 1,200 characters (approximately 200 words). There is no ability to attach documents to the report.

This limit doesn’t consider the complexity of the serious tax evasion and avoidance that HMRC is seeking to uncover. This is another difference between the US and UK programs. The IRS doesn’t impose any character limit and asks for detailed information including documents “to support the allegation.”

Criminal Investigation

While HMRC generally uses civil powers to address tax evasion and avoidance, it may launch a criminal investigation in more egregious cases. The UK must ensure that adequate safeguards—including concerning disclosure under the Criminal Procedure and Investigations Act 1996—are in place for criminal defendants in cases involving whistleblowers.

In August 2025, for example, HMRC initiated its first corporate prosecution under the failure to prevent the facilitation of tax evasion offense (introduced by the Criminal Finances Act 2017). It’s unclear whether the new HMRC reward program will cause tax prosecutions to rise, but if it does, transparency of process and disclosure will become crucial issues.

Looking Ahead

The SRS represents a significant change in government policy. While the UK traditionally has resisted whistleblower awards, a growing body of evidence—including research by the Royal United Services Institute published in December 2024—has shown that rewards with appropriate safeguards can incentivize reporting.

However, the guidance and safeguards on offer under the HMRC regime fall short of being the comprehensive US-style program that many had envisioned.

There is an opportunity for HMRC to rectify some of these shortcomings by establishing a dedicated office to administer whistleblower awards and providing clearer guidance and certainty to whistleblowers.

The success of the SRS matters more widely in the fight against economic crime. The Serious Fraud Office has increasingly advocated for the ability to pay whistleblowers.

If the SRS leads to an increase in valuable whistleblower reports, it may offer a route map for the Serious Fraud Office and other government agencies to implement similar regimes in the future.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Judith Seddon is a partner in the dispute resolution practice with Ashurst.

Tom Stroud is a senior associate in the dispute resolution practice with Ashurst.

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